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Retirement Plans And Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Retirement Plans And Other Postretirement Benefits | 8. RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS Tredegar sponsored a noncontributory defined benefit (pension) plan covering certain current and former U.S. employees. The plan for salaried and hourly employees was based on a formula using the participant’s years of service and compensation or using the participant’s years of service and a dollar amount. The plan is closed to new participants and pay for active plan participants for benefit calculations was frozen as of December 31, 2007. As of January 31, 2018, the plan no longer accrued benefits associated with crediting employees for service, thereby freezing all future benefits under the plan. On February 10, 2022, Tredegar announced the initiation of a process to terminate and settle its frozen defined benefit pension plan through lump sum distributions and the purchase of annuity contracts. In connection therewith, on February 9, 2022, the Company contributed $50 million to the pension plan. During the third quarter of 2023, the Company remeasured the pension plan, which resulted in a pre-tax pension settlement loss in the consolidated results of operation of $25.6 million. The remeasurement of the pension benefit obligation and plan assets was triggered by $64.5 million of lump sum distributions from the pension plan assets which exceeded the pension plan's service and interest cost. On September 27, 2023, the Company borrowed $30 million under the Prior Credit Agreement in anticipation of the final funding expected for terminating its defined benefit pension plan obligation. On October 31, 2023, the Company used this cash to contribute $27.7 million to fully fund the pension plan with the amount necessary to purchase from Massachusetts Mutual Life Insurance Company a nonparticipating single premium group annuity contract for $157.5 million. On November 3, 2023, the pension plan termination and settlement process was completed, and the Company’s relevant pension plan obligation was transferred to Massachusetts Mutual Life Insurance Company. This completed the pension plan termination process that began in February 2022. As a result of the routine administrative process to transition the pension plan, the Company recognized a $2.0 million charge to adjust the initial purchase price of the nonparticipating single premium group annuity contract. During the fourth quarter of 2023, the Company recognized a pre-tax pension settlement loss of $66.7 million. Tredegar also has a non-qualified supplemental pension plan covering certain employees. Effective December 31, 2005, further participation in this plan was terminated and benefit accruals for existing participants were frozen. The plan was designed to restore all or a part of the pension benefits that would have been payable to designated participants from the principal pension plans if it were not for limitations imposed by income tax regulations. The projected benefit obligation relating to this unfunded plan was $1.6 million and $1.7 million at December 31, 2023 and December 31, 2022, respectively. Pension expense recognized for this plan was $0.1 million in 2023, 2022 and 2021. This information has been included in the pension benefit tables below. In addition to providing pension benefits, the Company provides postretirement life insurance and health care benefits for certain groups of employees. Tredegar and retirees share in the cost of postretirement health care benefits, with employees hired on or before January 1, 1993, receiving a fixed subsidy to cover a portion of their health care premiums. The Company eliminated prescription drug coverage for Medicare-eligible retirees as of January 1, 2006. Consequently, Tredegar is not eligible for any federal subsidies. The following tables reconcile the changes in benefit obligations and plan assets in 2023 and 2022, and reconcile the funded status to prepaid or accrued cost at December 31, 2023 and 2022:
| Pension Benefits |  |  | Other Post- Retirement Benefits
(In thousands) | 2023 |  | 2022 |  |  | 2023 |  | 2022
Change in benefit obligation: |  |  |  |  |  |  |  |
Benefit obligation, beginning of year | $ | 248,114 |  |  | $ | 316,169 |  |  |  | $ | 5,726 |  |  | $ | 7,370 |
Service cost | — |  |  | — |  |  |  | 10 |  |  | 18 |
Interest cost | 9,623 |  |  | 8,945 |  |  |  | 288 |  |  | 207 |
Effect of actuarial (gains) losses related to the following: |  |  |  |  |  |  |  |
Discount rate change | (10,751) |  |  | (61,519) |  |  |  | 99 |  |  | (1,483) |
Other | (6,459) |  |  | 1,513 |  |  |  | 12 |  |  | 90 |
Plan participant contributions | — |  |  | — |  |  |  | 490 |  |  | 554 |
Benefits paid | (16,957) |  |  | (16,994) |  |  |  | (913) |  |  | (1,030) |
Settlement payments and annuity purchase | (221,970) |  |  | — |  |  |  | — |  |  | — |
Benefit obligation, end of year | $ | 1,600 |  |  | $ | 248,114 |  |  |  | $ | 5,712 |  |  | $ | 5,726 |
Change in plan assets: |  |  |  |  |  |  |  |
Plan assets at fair value, beginning of year | $ | 218,119 |  |  | $ | 244,612 |  |  |  | $ | — |  |  | $ | — |
Actual return on plan assets | (7,053) |  |  | (59,683) |  |  |  | — |  |  | — |
Employer contributions | 27,861 |  |  | 50,184 |  |  |  | 423 |  |  | 476 |
Plan participant contributions | — |  |  | — |  |  |  | 490 |  |  | 554 |
Benefits paid | (16,957) |  |  | (16,994) |  |  |  | (913) |  |  | (1,030) |
Settlement payments and annuity purchase | (221,970) |  |  | — |  |  |  | — |  |  | — |
Plan assets at fair value, end of year | $ | — |  |  | $ | 218,119 |  |  |  | $ | — |  |  | $ | — |
Funded status of the plans | $ | (1,600) |  |  | $ | (29,995) |  |  |  | $ | (5,712) |  |  | $ | (5,726) |
Amounts recognized in the consolidated balance sheets: |  |  |  |  |  |  |  |
Accrued expenses (current) | $ | 180 |  |  | $ | 180 |  |  |  | $ | 489 |  |  | $ | 489 |
Pension and other postretirement benefit obligations, net | 1,420 |  |  | 29,815 |  |  |  | 5,223 |  |  | 5,237 |
Net amount recognized | $ | 1,600 |  |  | $ | 29,995 |  |  |  | $ | 5,712 |  |  | $ | 5,726 |
The following table sets forth the assumptions used in accounting for the pension and other post-retirement benefits, and the components of net periodic benefit cost:
| Pension Benefits |  |  | Other Post- Retirement Benefits
(In thousands, except percentages) | 2023 |  | 2022 |  | 2021 |  |  | 2023 |  | 2022 |  | 2021
Weighted-average assumptions used to determine benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate | 4.89 | % |  | 5.07 | % |  | 2.90 | % |  |  | 4.98 | % |  | 5.17 | % |  | 2.86 | %
Expected long-term return on plan assets | n/a |  | 4.99 | % |  | 3.05 | % |  |  | n/a |  | n/a |  | n/a
Weighted-average assumptions used to determine net periodic benefit cost: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate(a) | 5.07%/5.37% |  | 2.90 | % |  | 2.57 | % |  |  | 5.17 | % |  | 2.86 | % |  | 2.54 | %
Expected long-term return on plan assets | n/a |  | 3.05 | % |  | 5.00 | % |  |  | n/a |  | n/a |  | n/a
Components of net periodic benefit cost: |  |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | — |  |  | $ | — |  |  | $ | — |  |  |  | $ | 10 |  |  | $ | 18 |  |  | $ | 21 |
Interest cost | 9,623 |  |  | 8,945 |  |  | 8,398 |  |  |  | 288 |  |  | 207 |  |  | 195 |
Expected return on plan assets | (8,109) |  |  | (8,174) |  |  | (11,316) |  |  |  | — |  |  | — |  |  | — |
Amortization of prior service costs and gains or losses | 9,245 |  |  | 13,746 |  |  | 17,003 |  |  |  | (213) |  |  | (140) |  |  | (141) |
Net periodic benefit cost | $ | 10,759 |  |  | $ | 14,517 |  |  | $ | 14,085 |  |  |  | $ | 85 |  |  | $ | 85 |  |  | $ | 75 |
Pension settlement loss | 92,291 |  |  | — |  |  | — |  |  |  | — |  |  | — |  |  | — |
Total benefit cost | $ | 103,050 |  |  | $ | 14,517 |  |  | $ | 14,085 |  |  |  | $ | 85 |  |  | $ | 85 |  |  | $ | 75 |
(a) Prior to the pension lump sum distributions in August 2023, a discount rate of 5.07% was used to determine the net periodic benefit cost. Subsequent to August 2023, a discount rate of 5.37% was used to determine the net periodic benefit cost until the Company purchased a nonparticipating single premium group annuity contract in October 2023.
Net periodic benefit cost is determined using assumptions at the beginning of each year. Funded status is determined using assumptions at the end of each year. The amount of the accumulated benefit obligation is the same as the projected benefit obligation. At December 31, 2023, the effect of a 1% change in the health care cost trend rate assumptions would not impact the post-retirement obligation. Expected benefit payments over the next five years and in the aggregate for 2028—2032 are as follows:
(In thousands) | Pension Benefits |  | Other Post- Retirement Benefits
2024 | $ | 180 |  |  | $ | 481 |
2025 | 172 |  |  | 470 |
2026 | 165 |  |  | 456 |
2027 | 157 |  |  | 445 |
2028 | 148 |  |  | 433 |
2028—2032 | 620 |  |  | 1,998 |
The pre-tax amounts recorded in 2023, 2022 and 2021 in accumulated other comprehensive income (loss) consist of:
| Pension Benefits |  | Other Post-Retirement Benefits
(In thousands) | 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Net actuarial (gain) loss | $ | 415 |  |  | $ | 103,998 |  |  | $ | 109,893 |  |  | $ | (1,250) |  |  | $ | (1,574) |  |  | $ | (320) |
The amounts in accumulated other comprehensive income, before related deferred income taxes, which are expected to be recognized as components of net periodic cost during 2024 are approximately $0.1 million of benefit for other post-retirement plans. There were no plan assets as of December 31, 2023. The percentage composition of assets held by the pension plan at December 31, 2022 was as follows:
| % Composition of Plan Assets at December 31,
| 2022
Pension plan: |
Fixed income mutual fund | 13.9 | %
Private equity and hedge funds | 4.8 |
Collective investment trust | 69.9 |
Cash and cash equivalents | 11.4 |
Total | 100.0 | %
Following the announcement to terminate and settle the pension plan in 2022, the Company contributed $50 million to the pension plan and implemented (through consultation with its investment advisors) a liability-matching bond portfolio investment strategy (including a derivative overlay) that hedged the estimated settlement funding gap, which was approximately $24 million (before plan administration costs) at that time. The overall objective of this hedging program was to minimize the volatility of the estimated settlement funding gap such that, as applicable interest rates moved up or down causing a decrease or increase in the estimated value of the settlement liability, the value of the matching bond portfolio and derivative overlay decreased or increased by a similar amount. Accordingly, the expected long-term rate return of 3.05% used in 2022 and 4.99% used in 2023 contemplated the liability-driven investment strategy. A lower expected return on plan assets increased the amount of expense and vice versa. Decreases in the level of actual plan assets would also serve to increase the amount of pension expense. The total return on plan assets (net of fees and plan expenses), which was primarily affected by the change in fair value of plan assets, current year contributions and current year payments to participants, was approximately negative 15.1% in 2022 and positive 10.4% in 2021. Estimates of the fair value of assets held by the Company’s pension plan were provided by unaffiliated third parties. Investments in collective investment trusts, private equity, hedge funds and certain international equity securities were measured at net asset value, which was a practical expedient for measuring fair value. These assets were therefore excluded from the fair value hierarchy for each of the year presented. At December 31, 2022, the pension plan assets are categorized by level within the fair value measurement hierarchy as follows:
(In thousands) | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Balances at December 31, 2022 |  |  |  |  |  |  |
Cash and cash equivalents(a) | $ | 24,796 |  |  | $ | 24,796 |  |  | $ | — |  |  | $ | — |
Fixed income mutual fund | 30,284 |  |  | 30,284 |  |  | — |  |  | — |
Private equity and hedge funds(b) | 10,250 |  |  | — |  |  | — |  |  | 10,250 |
Total plan assets at fair value | $ | 65,330 |  |  | $ | 55,080 |  |  | $ | — |  |  | $ | 10,250 |
Investments measured at net asset value: |  |  |  |  |  |  |
Collective investment trust(c) | 152,389 |  |  |  |  |  |  |
Private equity and hedge funds | 141 |  |  |  |  |  |  |
Total investments measured at net asset value | $ | 152,530 |  |  |  |  |  |  |
Securities sold and interest receivable | 259 |  |  |  |  |  |  |
Total plan assets, December 31, 2022 | $ | 218,119 |  |  |  |  |  |  |
(a) This category represents investments in cash and cash equivalents, which includes: 1.) cash held in the plan used for investments in U.S. Treasury futures which were entered into to minimize the volatility of the estimated settlement funding gap; and 2.) short term money market fund in which the amortized cost approximates fair value. These investments were highly liquid and therefore were classified as Level 1 securities. (b) Represents the estimated fair market value of the Company’s ownership in private equity and hedge funds which were probable of being sold for an amount different from the net asset value per share in connection with the expected termination of the pension plan. (c) The collective investment trust contains liability hedging fixed income investments and were valued at the net asset value of the collective investment trust. The net asset value was used as a practical expedient to estimate fair value. The net asset value was based on the fair value of the underlying investments held by the fund less its liabilities. (d) Represents investments in certain commodity funds measured using quoted market prices.

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